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Note 2: Investments

12 Months Ended

Dec. 31, 2016

2) Investments

The Company’s investments in fixed maturity securities held to maturity and equity securities available for sale as of December 31, 2016 are summarized as follows:

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2016:
Fixed maturity securities held to maturity carried at amortized cost:
U.S. Treasury securities and obligations of U.S. Government agencies	$ 4,475,065	$ 249,028	$ (66,111)	$ 4,657,982

Obligations of states and political subdivisions	6,017,225	153,514	(133,249)	6,037,490

Corporate securities including public utilities	164,375,636	10,440,989	(3,727,013)	171,089,612

Mortgage-backed securities	9,488,083	221,400	(280,871)	9,428,612

Redeemable preferred stock	623,635	13,418	-	637,053

Total fixed maturity securities held to maturity	$ 184,979,644	$ 11,078,349	$ (4,207,244)	$ 191,850,749

Equity securities available for sale at estimated fair value:

Common stock:

Industrial, miscellaneous and all other	$ 10,985,338	$ 447,110	$ (859,092)	$ 10,573,356

Total securities available for sale carried at estimated fair value	$ 10,985,338	$ 447,110	$ (859,092)	$ 10,573,356

Mortgage loans on real estate and construction loans held for investment at amortized cost:
Residential	$ 58,593,622
Residential construction	40,800,117
Commercial	51,536,622
Less: Allowance for loan losses	(1,748,783)

Total mortgage loans on real estate and construction loans held for investment	$ 149,181,578

Real estate held for investment - net of depreciation	$ 145,165,921

Policy loans and other investments are shown at amortized cost except for other investments that are shown at estimated fair value:
Policy loans	$ 6,694,148
Insurance assignments	33,548,079
Promissory notes	48,797
Other investments at estimated fair value	1,765,752
Less: Allowance for doubtful accounts	(1,119,630)

Total policy loans and other investments	$ 40,937,146

Short-term investments at amortized cost	$ 27,560,040

The Company’s investments in fixed maturity securities held to maturity and equity securities available for sale as of December 31, 2015 are summarized as follows:

	Amortized Cost	Gross Unrealized Gains	Gross Unrealized Losses	Estimated Fair Value
December 31, 2015:
Fixed maturity securities held to maturity carried at amortized cost:
U.S. Treasury securities and obligations of U.S. Government agencies	$ 3,560,579	$ 292,869	$ (4,743)	$ 3,848,705

Obligations of states and political subdivisions	1,805,828	182,073	(1,040)	1,986,861

Corporate securities including public utilities	134,488,108	9,836,355	(5,501,743)	138,822,720

Mortgage-backed securities	5,091,887	190,867	(75,580)	5,207,174

Redeemable preferred stock	612,023	29,675	-	641,698

Total fixed maturity securities held to maturity	$ 145,558,425	$ 10,531,839	$ (5,583,106)	$ 150,507,158

Equity securities available for sale at estimated fair value:

Common stock:

Industrial, miscellaneous and all other	$ 9,891,500	$ 213,684	$ (1,674,094)	$ 8,431,090

Total securities available for sale carried at estimated fair value	$ 9,891,500	$ 213,684	$ (1,674,094)	$ 8,431,090

Mortgage loans on real estate and construction loans held for investment at amortized cost:
Residential	$ 46,020,490
Residential construction	34,851,557
Commercial	33,522,978
Less: Allowance for loan losses	(1,848,120)

Total mortgage loans on real estate and construction loans held for investment	$ 112,546,905

Real estate held for investment - net of depreciation	$ 114,852,432

Policy loans and other investments are shown at amortized cost except for other investments that are shown at estimated fair value:
Policy loans	$ 6,896,457
Insurance assignments	32,369,014
Promissory notes	48,797
Other investments at estimated fair value	1,174,769
Less: Allowance for doubtful accounts	(906,616)

Total policy loans and other investments	$ 39,582,421

Short-term investments at amortized cost	$ 16,915,808

Fixed Maturity Securities

The following tables summarize unrealized losses on fixed maturities securities, which are carried at amortized cost, at December 31, 2016 and 2015. The unrealized losses were primarily related to interest rate fluctuations. The tables set forth unrealized losses by duration and number of investment positions, together with the fair value of the related fixed maturity securities:

	Unrealized Losses for Less than Twelve Months	Fair Value	Unrealized Losses for More than Twelve Months	Fair Value	Total Unrealized Loss	Fair Value
At December 31, 2016
U.S. Treasury Securities and Obligations
of U.S. Government Agencies	$ 66,111	$ 1,342,088	$ -	$ -	$ 66,111	$ 1,342,088
Obligations of States and
Political Subdivisions	133,249	3,686,856	-	-	133,249	3,686,856
Corporate Securities	1,728,312	41,796,016	1,998,701	12,969,135	3,727,013	54,765,151
Mortgage and other
asset-backed securities	176,715	4,176,089	104,156	940,278	280,871	5,116,367
Total unrealized losses	$ 2,104,387	$ 51,001,049	$ 2,102,857	$ 13,909,413	$ 4,207,244	$ 64,910,462


	Unrealized Losses for Less than Twelve Months	Fair Value	Unrealized Losses for More than Twelve Months	Fair Value	Total Unrealized Loss	Fair Value
At December 31, 2015
U.S. Treasury Securities and Obligations
of U.S. Government Agencies	$ 4,743	$ 2,191,782	$ -	$ -	$ 4,743	$ 2,191,782
Obligations of States and
Political Subdivisions	-	-	1,040	86,388	1,040	86,388
Corporate Securities	3,701,572	30,109,114	1,800,171	3,723,569	5,501,743	33,832,683
Mortgage and other
asset-backed securities	75,580	1,775,505	-	-	75,580	1,775,505
Total unrealized losses	$ 3,781,895	$ 34,076,401	$ 1,801,211	$ 3,809,957	$ 5,583,106	$ 37,886,358

There were 250 securities with unrealized losses of 93.9% of amortized cost at December 31, 2016. There were 123 securities with unrealized losses of 87.2% of amortized cost at December 31, 2015. During the years ended December 31, 2016, 2015 and 2014, an other than temporary decline in market value resulted in the recognition of credit losses on fixed maturity securities of $100,000, $120,000 and $120,000, respectively.

On a quarterly basis, the Company reviews its available for sale and held to maturity fixed investment securities related to corporate securities and other public utilities, consisting of bonds and preferred stocks that are in a loss position. The review involves an analysis of the securities in relation to historical values, and projected earnings and revenue growth rates. Based on the analysis, a determination is made whether a security will likely recover from the loss position within a reasonable period of time. If it is unlikely that the investment will recover from the loss position, the loss is considered to be other than temporary, the security is written down to the impaired value and an impairment loss is recognized.

Equity Securities

The following tables summarize unrealized losses on equity securities that were carried at estimated fair value based on quoted trading prices at December 31, 2016 and 2015. The unrealized losses were primarily the result of decreases in market value due to overall equity market declines. The tables set forth unrealized losses by duration and number of investment positions, together with the fair value of the related equity securities available for sale in a loss position:

	Unrealized Losses for Less than Twelve Months	No. of Investment Positions	Unrealized Losses for More than Twelve Months	No. of Investment Positions	Total Unrealized Losses
At December 31, 2016
Industrial, miscellaneous and all other	$ 215,563	124	$ 643,529	104	$ 859,092
Total unrealized losses	$ 215,563	124	$ 643,529	104	$ 859,092
Fair Value	$ 2,063,144		$ 1,685,874		$ 3,749,018

At December 31, 2015
Industrial, miscellaneous and all other	$ 997,862	222	$ 676,232	74	$ 1,674,094
Total unrealized losses	$ 997,862	222	$ 676,232	74	$ 1,674,094
Fair Value	$ 4,177,709		$ 760,860		$ 4,938,569

The average market value of the equity securities available for sale was 81.4% and 74.7% of the original investment as of December 31, 2016 and 2015, respectively. The intent of the Company is to retain equity securities for a period of time sufficient to allow for the recovery in fair value. However, the Company may sell equity securities during a period in which the fair value has declined below the amount of the original investment. In certain situations, new factors, including changes in the business environment, can change the Company’s previous intent to continue holding a security. During the years ended December 31, 2016, 2015, and 2014, an other than temporary decline in the market value resulted in the recognition of an impairment loss on equity securities of $170,358, $293,714, and $44,240, respectively.

On a quarterly basis, the Company reviews its investment in industrial, miscellaneous and all other equity securities that are in a loss position. The review involves an analysis of the securities in relation to historical values, price earnings ratios, projected earnings and revenue growth rates. Based on the analysis a determination is made whether a security will likely recover from the loss position within a reasonable period of time. If it is unlikely that the investment will recover from the loss position, the loss is considered to be other than temporary, the security is written down to the impaired value and an impairment loss is recognized.

The fair values of fixed maturity securities are based on quoted market prices, when available. For fixed maturity securities not actively traded, fair values are estimated using values obtained from independent pricing services, or in the case of private placements, are estimated by discounting expected future cash flows using a current market value applicable to the coupon rate, credit and maturity of the investments. The fair values for equity securities are based on quoted market prices.

The amortized cost and estimated fair value of fixed maturity securities at December 31, 2016, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized	Estimated Fair
	Cost	Value
Held to Maturity:
Due in 2017	$ 6,148,334	$ 6,232,674
Due in 2018 through 2021	42,886,637	44,879,897
Due in 2022 through 2026	42,090,383	43,288,035
Due after 2026	83,742,572	87,324,617
Mortgage-backed securities	9,488,083	9,488,473
Redeemable preferred stock	623,635	637,053
Total held to maturity	$ 184,979,644	$ 191,850,749

The cost and estimated fair value of available for sale securities at December 31, 2016, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because certain borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. Equities are valued using the specific identification method.

		Estimated Fair
	Cost	Value
Available for Sale:
Common stock	$ 10,985,338	$ 10,573,356
Total available for sale	$ 10,985,338	$ 10,573,356

The Company’s realized gains and losses and other than temporary impairments from investments and other assets for the years ended December 31 are summarized as follows:

	2016	2015	2014
Fixed maturity securities held
to maturity:
Gross realized gains	$ 389,558	$ 387,162	$ 390,203
Gross realized losses	(132,124)	(82,166)	(71,800)
Other than temporary impairments	(100,000)	(120,000)	(120,000)

Securities available for sale:
Gross realized gains	221,817	180,602	349,207
Gross realized losses	(61,242)	(66,850)	(55,222)
Other than temporary impairments	(170,358)	(293,714)	(44,240)

Other assets:
Gross realized gains	349,252	2,067,438	1,445,596
Gross realized losses	(943,648)	(84,827)	(139,808)
Other than temporary impairments	-	(191,716)	-
Total	$ (446,745)	$ 1,795,929	$ 1,753,936

The net carrying amount for disposals of securities classified as held to maturity was $2,380,027, $2,569,712 and $2,840,709, for the years ended December 31, 2016, 2015 and 2014, respectively. The net realized gain related to these disposals was $155,346, $311,752 and $20,722, for the years ended December 31, 2016, 2015 and 2014, respectively. Although the intent is to buy and hold a bond to maturity the Company will sell a bond prior to maturity if conditions have changed within the entity that issued the bond to increase the risk of default to an unacceptable level.

There were no investments, aggregated by issuer, in excess of 10% of shareholders’ equity (before net unrealized gains and losses on available-for-sale securities) at December 31, 2016, other than investments issued or guaranteed by the United States Government.

Major categories of net investment income for the years ended December 31, are as follows:

	2016	2015	2014
Fixed maturity securities	$ 8,972,877	$ 8,168,441	$ 8,229,451
Equity securities	270,942	269,795	212,917
Mortgage loans on real estate	8,963,105	7,696,533	7,550,110
Real estate	10,969,828	9,454,567	8,433,895
Policy loans	781,188	749,917	741,220
Insurance assignments	11,876,836	8,915,655	7,324,964
Other investments	25,122	6,533	-
Short-term investments, principally gains on sale of mortgage loans	4,976,180	7,594,014	5,072,418
Gross investment income	46,836,078	42,855,455	37,564,975
Investment expenses	(9,253,634)	(8,847,551)	(9,261,235)
Net investment income	$ 37,582,444	$ 34,007,904	$ 28,303,740

Net investment income includes net investment income earned by the restricted assets of the cemeteries and mortuaries of $419,360, $369,632 and $356,369 for the years ended December 31, 2016, 2015 and 2014, respectively.

Net investment income on real estate consists primarily of rental revenue received under short-term leases.

Investment expenses consist primarily of depreciation, property taxes, operating expenses of real estate and an estimated portion of administrative expenses relating to investment activities.

Securities on deposit for regulatory authorities as required by law amounted to $9,269,121 and $8,815,542 at December 31, 2016 and 2015, respectively. The restricted securities are included in various assets under investments on the accompanying consolidated balance sheets.

Real Estate

The Company continues to strategically deploy resources into real estate to match the income and yield durations of its primary obligations. The sources for these real estate assets come through its various business segments in the form of acquisition, development and mortgage foreclosures. The Company reports real estate held for investment pursuant to the accounting policy discussed in Note 1 and Note 16 of the Notes to Consolidated Financial Statements.

Commercial Real Estate Held for Investment

The Company owns and manages commercial real estate assets as a means of generating investment income. These assets are acquired in accordance with the Company’s goals and objectives for risk-adjusted returns. Due diligence is conducted on each asset using internal and third party reports. Geographic locations and asset classes of the investment activity is determined by senior management under the direction of the Board of Directors.

The Company employs full-time employees to attend to the day-to-day operations of those assets within the greater Salt Lake area and close surrounding markets. The Company utilizes third party property managers when the geographic boundary does not warrant full-time staff or through strategic lease-up periods. The Company generally looks to acquire assets in regions that are high growth regions for employment and population and in assets that provide operational efficiencies.

The Company currently owns and operates 13 commercial properties in 7 states. These properties include industrial warehouses, office buildings, retail centers and includes the redevelopment and expansion of its corporate campus in Salt Lake City Utah. The assets are primarily held without debt; however, the Company does use debt in strategic cases to leverage established yields or to acquire higher quality or different class of asset.

The following is a summary of the Company’s investment in commercial real estate for the periods presented:

	Net Ending Balance				Total Square Footage
	December 31				December 31
	2016		2015		2016	2015
Arizona	$ 450,538	(1)	$ 463,774	(1)	16,270	16,270
Arkansas	100,369		-		3,200	-
Kansas	12,450,297		11,537,335		222,679	222,679
Louisiana	518,700		-		7,063	-
Mississippi	3,818,985		-		33,821	-
New Mexico	7,000	(1)	7,000	(1)	-	-
Texas	3,734,974		3,768,542		23,470	23,470
Utah	47,893,073	(2)	17,403,746		433,244	253,244

	$ 68,973,936		$ 33,180,397		739,747	515,663

(1) Includes Vacant Land
(2) Includes 53rd Center to be completed in July 2017.

Residential Real Estate Held for Investment

The Company owns a portfolio of residential homes primarily as a result of loan foreclosures. The strategy has been to lease these homes to produce cash flow, and allow time for the economic fundamentals to return to the various markets. As an orderly and active market for these homes returns, the Company has the option to dispose or to continue and hold them for cash flow and acceptable returns.

The Company established Security National Real Estate Services (“SNRE”) in 2013 to manage the residential portfolio. SNRE cultivates and maintains the preferred vendor relationships necessary to manage costs and quality of work performed on the portfolio of homes across the country.

As of December 31, 2016, SNRE manages 129 residential properties in 8 states across the United States which includes a newly constructed apartment complex, Dry Creek at East Village, in Sandy Utah.

The following is a summary of the Company’s investment in residential real estate for the periods presented:

	Net Ending Balance
	December 31
	2016	2015
Arizona	$ 742,259	$ 944,614
California	5,848,389	6,158,253
Colorado	364,489	553,230
Florida	8,327,355	9,203,624
Illinois	-	165,800
Oklahoma	46,658	99,862
Oregon	-	120,000
South Carolina	-	823,872
Texas	1,091,188	1,198,860
Utah	59,485,466	62,117,738
Washington	286,181	286,182
	$ 76,191,985	$ 81,672,035

Real Estate Owned and Occupied by the Company

The primary business units of the Company occupy a portion of the real estate owned by the Company. Currently, the Company occupies nearly 80,000 square feet, or 10% of the overall commercial real estate holdings.

As of December 31, 2016, real estate owned and occupied by the company is summarized as follows:

Mortgage Loans

Mortgage loans consist of first and second mortgages. The mortgage loans bear interest at rates ranging from 2.0 % to 10.5%, maturity dates range from three months to 30 years and are secured by real estate. Concentrations of credit risk arise when a number of mortgage loan debtors have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic conditions. Although the Company has a diversified mortgage loan portfolio consisting of residential mortgages, commercial loans and residential construction loans and requires collateral on all real estate exposures, a substantial portion of its debtors’ ability to honor obligations is reliant on the economic stability of the geographic region in which the debtors do business. At December 31, 2016, the Company has 42%, 14%, 9%, 8% and 7% of its mortgage loans from borrowers located in the states of Utah, California, Texas, Florida and Nevada, respectively. The mortgage loans on real estate balances on the consolidated balance sheet are reflected net of an allowance for loan losses of $1,748,783 and $1,848,120 at December 31, 2016 and 2015, respectively.

The Company establishes a valuation allowance for credit losses in its portfolio. The following is a summary of the allowance for loan losses as a contra-asset account for the periods presented:

Allowance for Credit Losses and Recorded Investment in Mortgage Loans
Years Ended December 31

	Commercial	Residential	Residential Construction	Total
2016
Allowance for credit losses:
Beginning balance	$ 187,129	$ 1,560,877	$ 100,114	$ 1,848,120
Charge-offs	-	(420,135)	-	(420,135)
Provision	-	320,798	-	320,798
Ending balance	$ 187,129	$ 1,461,540	$ 100,114	$ 1,748,783

Ending balance: individually evaluated for impairment	$ -	$ 187,470	$ -	$ 187,470

Ending balance: collectively evaluated for impairment	$ 187,129	$ 1,274,070	$ 100,114	$ 1,561,313

Ending balance: loans acquired with deteriorated credit quality	$ -	$ -	$ -	$ -

Mortgage loans:
Ending balance	$ 51,536,622	$ 58,593,622	$ 40,800,117	$ 150,930,361

Ending balance: individually evaluated for impairment	$ 202,992	$ 2,916,538	$ 64,895	$ 3,184,425

Ending balance: collectively evaluated for impairment	$ 51,333,630	$ 55,677,084	$ 40,735,222	$ 147,745,936

Ending balance: loans acquired with deteriorated credit quality	$ -	$ -	$ -	$ -

2015
Allowance for credit losses:
Beginning balance	$ 187,129	$ 1,715,812	$ 100,114	$ 2,003,055
Charge-offs	-	(123,942)	-	(123,942)
Provision	-	(30,993)	-	(30,993)
Ending balance	$ 187,129	$ 1,560,877	$ 100,114	$ 1,848,120

Ending balance: individually evaluated for impairment	$ -	$ 305,962	$ -	$ 305,962

Ending balance: collectively evaluated for impairment	$ 187,129	$ 1,254,915	$ 100,114	$ 1,542,158

Ending balance: loans acquired with deteriorated credit quality	$ -	$ -	$ -	$ -

Mortgage loans:
Ending balance	$ 33,522,978	$ 46,020,490	$ 34,851,557	$ 114,395,025

Ending balance: individually evaluated for impairment	$ -	$ 3,087,161	$ 93,269	$ 3,180,430

Ending balance: collectively evaluated for impairment	$ 33,522,978	$ 42,933,329	$ 34,758,287	$ 111,214,594

Ending balance: loans acquired with deteriorated credit quality	$ -	$ -	$ -	$ -

The following is a summary of the aging of mortgage loans for the periods presented.

Age Analysis of Past Due Mortgage Loans
Years Ended December 31

	30-59 Days Past Due	60-89 Days Past Due	Greater Than 90 Days 1)	In Process of Foreclosure 1)	Total Past Due	Current	Total Mortgage Loans	Allowance for Loan Losses	Net Mortgage Loans
2016
Commercial	$ -	$ -	$ -	$ 202,992	$ 202,992	$ 51,333,630	$ 51,536,622	$ (187,129)	$ 51,349,493
Residential	964,960	996,779	1,290,355	1,626,183	4,878,277	53,715,345	58,593,622	(1,461,540)	57,132,082
Residential Construction	-	-	64,895	-	64,895	40,735,222	40,800,117	(100,114)	40,700,003

Total	$ 964,960	$ 996,779	$ 1,355,250	$ 1,829,175	$ 5,146,164	$ 145,784,197	$ 150,930,361	$ (1,748,783)	$ 149,181,578

2015
Commercial	$ -	$ -	$ -	$ -	$ -	$ 33,522,978	$ 33,522,978	$ (187,129)	$ 33,335,849
Residential	1,162,102	884,143	2,212,993	3,087,161	7,346,399	38,674,091	46,020,490	(1,560,877)	44,459,613
Residential Construction	-	-	64,895	93,269	158,164	34,693,393	34,851,557	(100,114)	34,751,443

Total	$ 1,162,102	$ 884,143	$ 2,277,888	$ 3,180,430	$ 7,504,563	$ 106,890,462	$ 114,395,025	$ (1,848,120)	$ 112,546,905

1) There was not any interest income recognized on loans past due greater than 90 days or in foreclosure.

Impaired Mortgage Loans

Impaired mortgage loans include loans with a related specific valuation allowance or loans whose carrying amount has been reduced to the expected collectible amount because the impairment has been considered other than temporary. The recorded investment in and unpaid principal balance of impaired loans along with the related loan specific allowance for losses, if any, for each reporting period and the average recorded investment and interest income recognized during the time the loans were impaired were as follows:

Impaired Loans
Years Ended December 31
	Recorded Investment	Unpaid Principal Balance	Related Allowance	Average Recorded Investment	Interest Income Recognized
2016
With no related allowance recorded:
Commercial	$ 202,992	$ 202,992	$ -	$ 202,992	$ -
Residential	-	-	-	-	-
Residential construction	64,895	64,895	-	64,895	-

With an allowance recorded:
Commercial	$ -	$ -	$ -	$ -	$ -
Residential	2,916,538	2,916,538	374,501	2,916,538	-
Residential construction	-	-	-	-	-

Total:
Commercial	$ 202,992	$ 202,992	$ -	$ 202,992	$ -
Residential	2,916,538	2,916,538	374,501	2,916,538	-
Residential construction	64,895	64,895	-	64,895	-

2015
With no related allowance recorded:
Commercial	$ -	$ -	$ -	$ -	$ -
Residential	-	-	-	-	-
Residential construction	93,269	93,269	-	93,269	-

With an allowance recorded:
Commercial	$ -	$ -	$ -	$ -	$ -
Residential	3,087,161	3,087,161	305,962	3,087,161	-
Residential construction	-	-	-	-	-

Total:
Commercial	$ -	$ -	$ -	$ -	$ -
Residential	3,087,161	3,087,161	305,962	3,087,161	-
Residential construction	93,269	93,269	-	93,269	-

Credit Risk Profile Based on Performance Status

The Company’s mortgage loan portfolio is monitored based on performance of the loans. Monitoring a mortgage loan increases when the loan is delinquent or earlier if there is an indication of impairment. The Company defines non-performing mortgage loans as loans 90 days or greater delinquent or on non-accrual status.

The Company’s performing and non-performing mortgage loans were as follows:

Mortgage Loan Credit Exposure
Credit Risk Profile Based on Payment Activity
Years Ended December 31

	Commercial		Residential		Residential Construction		Total
	2016	2015	2016	2015	2016	2015	2016	2015

Performing	$ 51,333,630	$ 33,522,978	$ 55,677,084	$ 40,720,336	$ 40,735,222	$ 34,693,393	$ 147,745,936	$ 108,936,707
Non-performing	202,992	-	2,916,538	5,300,154	64,895	158,164	3,184,425	5,458,318

Total	$ 51,536,622	$ 33,522,978	$ 58,593,622	$ 46,020,490	$ 40,800,117	$ 34,851,557	$ 150,930,361	$ 114,395,025

Non-Accrual Mortgage Loans

Once a loan is past due 90 days, it is the policy of the Company to end the accrual of interest income on the loan and write off any income that had been accrued. Interest not accrued on these loans totals $172,000 and $268,000 as of December 31, 2016 and 2015, respectively.

The following is a summary of mortgage loans on a non-accrual status for the periods presented.

	Mortgage Loans on Non-accrual Status
	Years Ended December 31
	2016	2015
Commercial	$ 202,992	$ -
Residential	2,916,538	5,300,154
Residential construction	64,895	158,164
Total	$ 3,184,425	$ 5,458,318

Principal Amounts Due

The amortized cost and contractual payments on mortgage loans on real estate and construction loans held for investment by category as of December 31, 2016 are shown below. Expected principal payments may differ from contractual obligations because certain borrowers may elect to pay off mortgage obligations with or without early payment penalties.

		Principal	Principal	Principal
		Amounts	Amounts	Amounts
		Due in	Due in	Due
	Total	2017	2018-2021	Thereafter
Residential	$ 58,593,622	$ 6,115,360	$ 11,916,728	$ 40,561,534
Residential Construction	40,800,117	32,504,143	8,295,974	-
Commercial	51,536,622	26,697,442	20,682,311	4,156,869
Total	$ 150,930,361	$ 65,316,945	$ 40,895,013	$ 44,718,403

Loan Loss Reserve

When a repurchase demand corresponding to a mortgage loan previously sold to a third party investor is received from a third-party investor, the relevant data is reviewed and captured so that an estimated future loss can be calculated. The key factors that are used in the estimated loss calculation are as follows: (i) lien position, (ii) payment status, (iii) claim type, (iv) unpaid principal balance, (v) interest rate, and (vi) validity of the demand. Other data is captured and is useful for management purposes; the actual estimated loss is generally based on these key factors. The Company conducts its own review upon the receipt of a repurchase demand. In many instances, the Company is able to resolve the issues relating to the repurchase demand by the third-party investor without having to make any payments to the investor.

The following is a summary of the loan loss reserve which is included in other liabilities and accrued expenses:

	December 31
	2016	2015
Balance, beginning of period	$ 2,805,900	$ 1,718,150
Provisions for losses	4,688,754	6,295,043
Charge-offs and settlements	(6,866,921)	(5,207,293)
Balance, at December 31	$ 627,733	$ 2,805,900

The Company believes the loan loss reserve represents probable loan losses incurred as of the balance sheet date. Actual loan loss experience could change, in the near-term, from the established reserve based upon claims that could be asserted by third party investors. SecurityNational Mortgage believes there is potential to resolve any alleged claims by third party investors on acceptable terms. If SecurityNational Mortgage is unable to resolve such claims on acceptable terms, legal action may ensue. In the event of legal action by any third-party investor, SecurityNational Mortgage believes it has significant defenses to any such action and intends to vigorously defend itself against such action.